Property experts have shrugged off warnings to Sydney investors from the Reserve Bank, saying it's targeting the wrong city.

Governor Glenn Stevens sent alarm bells ringing on Thursday when he singled out speculative buying activity in Sydney.

"Investors should take care in the Sydney market, which is the main area where a large increase in borrowing has been occuring ... people should not assume that prices always rise," Mr Stevens said in Hobart on Thursday.

"Economists are a lot more comfortable with Sydney than parts of Melbourne, where there's a hint of an oversupply," Mr Sparkes says.

"The reverse is evident in Sydney - supply has been very low for the last 10 years.

"I'm not seeing any signs of alarm - none whatsoever."

The Domain Group senior economist, Dr Andrew Wilson, says investors in Sydney property have plenty of reasons for optimism. "The NSW economy is strong, the jobless rate is low, employment levels are rising, confidence is high, retail spending is up - all the boxes are being ticked for ongoing activity in the market," he says.

He thinks the Reserve Bank governor was simply warning investors not to take the extraordinary price growth we've seen in the past year - 15 per cent - for granted.

But even though Mr Stevens said prices sometimes fall, he doesn't think Mr Stevens believes price drops are imminent.

"They can fall, but we don't really have the environment for prices to fall," Dr Wilson says.

"There are no clear signs that that speculative investment in the Sydney market has overshot the fundamentals - that's not to say that it won't."

Yet investors are continuing to be prominent at auctions throughout Sydney, outbidding first-home buyers - who are still at record-low numbers compared with the record-high numbers of investors.

The principal of inner-city agents Spencer & Servi First National, David Servi, says he's continuing to see plenty.

"A lot of people are using their self-managed super funds and interest is so low - money is cheap," Mr Servi says.

"Housing is a necessity - there's plenty of demand for housing.

"The inner-city areas in partucular are keenly sought-after - the traffic's getting worse, public transport's gettign worse and people want to be close to work and entertainment.

"The appeal of suburbia is lessening and the attraction of the inner city is growing."

Mr Steven's warning comes as new apartment blocks sell out off-the-plan - often within hours on launch day - with the largest proportion often being investors.

A director of CBRE Residential, Ben Stewart, says it was important for investors to make sure they buy good quality apartments in good locations.

"Interest rates are low, we've got a strong economy and investors see there is a shortage of supply," Mr Stewart says.